Vending machines dispense food and beverages to people on the go. The products that are typically sold in vending machines are not big-ticket items (except for car vending machines, of course), so people often wonder if vending machines are profitable. The fact is, vending machines can be highly profitable, if a business is structured in the right way.
There is a lot of money to be made in vending, and it shows in the current state of the industry. There are around 5 million operational vending machines in the US right now and they rake in over $7 billion in annual sales for their operators. As far as profits go, the snack niche alone generates $64 million in annual profits for vending machine operators.
As long as people eat and drink on the go, there will be a need for well-placed, well-stocked vending machines. But like any business, it is possible to have great success in vending machines, to fall in the middle of the pack, or even to fail. The key is having the right support, the right strategies and the right pricing structures in place to ensure a vending machine business makes money.
How Much Do Vending Machines Make?
The data surrounding individual vending machine profits can be difficult to parse out because there is such a wide fluctuation throughout the industry. For example, a single vending machine in a busy hotel with no restaurant could bring in hundreds of dollars a day, while a vending machine tucked away in a dark and dusty apartment laundry room could bring in as little as few dollars a month.
However, vending is a multi-billion dollar industry overall. People always have a need for food and drinks on the go and the industry shows absolutely no signs of slowing. In fact, it is expanding. How much a single vending machine makes depends on the type of machine, its location, the products it dispenses and the price of its items. But a great mix of machines and products can generate significant revenue for a vending machine business owner.
How Much Does It Cost to Start a Vending Machine Business?
It does not cost much to start a vending machine business, but startup costs do vary by the path you choose to enter the business. Starting a vending machine business on your own can keep startup costs down, but it can be impossible to break into the vending machine business without support. With no contacts, no established name brand in the industry, no track record and no mentors, it could take a solo vending machine owner months if not years to get a business up and running, which offsets those cheaper startup costs.
On the flip side, working with an established vending machine company as part of a franchise or franchise-like system might cost a little more up-front, but it will set up a vending machine business for success from day one by providing support in site selection, contracts, marketing, product sourcing and more.
To cover those slightly higher startup costs, there are many options for financing a vending machine business. They include cash, unsecured personal loans, secured personal loans, short-term business loans, an SBA loan, a home equity line of credit (HELOC) or special 401(k) rollovers designed for people starting businesses. The financing option you choose to launch a vending machine business will depend on your unique circumstances. Whenever possible, work with a financing expert to help you make the best decisions for yourself, your family and your future business.
Average Profit Margin for Vending Machines
As noted, with any type of business, vending machines businesses cost money to start. Those startup costs include the machines, rent for location space, inventory, maintenance, and more. The exact cost of doing business depends on the type of vending machine(s) you choose to operate how many machines you have in operation at any given time.
Pricing must also be strategic in order to make money. Let’s say you operate a cold beverage machine and sell products for $2 each but the machine is in a less-than-ideal location and only gets 10 sales per day. That machine’s net income is $20 per day. If the sodas cost you $1.50 each, your profit is only 50 cents per item and your overall profit is only $5 per day. To make your profits worthwhile, you’d have to own hundreds, if not thousands of soda machines in much better locations.
Conversely, if you have a well-placed machine filled with snacks, for example, that sold 50 items a day at around $4 each but you paid 50 cents for each snack, your profits would be around $175. If you have several popular, well-placed machines, your profits would be well worth the work.
The fact is that the vending machine business can be very profitable, but like any other business you have to put in the work in order for it to be successful.
What Are the Most Profitable Vending Machines?
While the average profit margins for vending machines can be quite high, some machines are a bit more profitable than others. Here are some of the most profitable types of vending machines:
Coffee Vending Machines
Americans drink over 77.4 billion cups of coffee and spend $35.8 billion annually. Coffee is big business, but running a profitable coffee machine – like so many other types of machines – requires a bit of strategic planning.
There are simply places where coffee machines won’t work like shopping malls and centers. They do work well in places like office buildings, apartment complexes, car dealerships and maintenance centers, medical centers, schools and places where you catch people doing a lot of waiting around or coming and going to work.
Pricing coffee requires knowing what a unique market can bear, but many coffee vending machine owners report profit margins over 200%.
Soda Vending Machines
Soda vending machines are some of the most popular in the market and in warm weather, the demand for cold beverages climbs exponentially. In warm climates, people will buy cold drinks year-round. In seasonal climates, demand can drop in the fall and winter months.
Soda and cold beverage machines do require refrigeration, which can make them slightly more expensive to operate, but they are the easiest type of machine to stock as selection can be minimal and profit margins can be strong, which priced correctly.
Sodas can be priced anywhere from $1.50 to upwards of $3.00 in some locations and cans are typically priced lower than bottles. Buying wholesale can help keep costs down, allowing operators to hit a $1 target vend goal per transaction.
Snack Vending Machines
Snack machines are highly popular vending machines, and they can be placed almost anywhere with heavy foot traffic. The markup on some snacks is a bit lower than something like candy but overall the margins on snacks are much wider. If a bag of nuts costs a vendor $1 to purchase, they can easily charge $2.
Snack vending machines also allow for more variety – which is great for consumers but does mean vendors will have to visit the machine more often to restock popular items.
Cold Food Vending Machines
Cold food vending machines dispense ready-to-eat, frozen or re-heatable items like salads, sandwiches, burritos, breakfast foods and full meals. To make this type of machine profitable, it is important to have a mix of foods that have a short shelf life and foods that have a longer shelf life.
Cold food vending machines must be refrigerated so, like soda machines, they can be a bit more expensive to run. Additionally, the food must be turned over quickly. However, because people are essentially paying for meals, items can be marked up considerably, especially if a machine takes credit or debit cards.
Vending Machine Profit Statistics
Realistically, one vending machine won’t be enough for an operator to retire to paradise after a few months in business. However, several strategically-placed vending machines with great products can provide a very healthy revenue stream.
Americans spend about $27 per person per year on items from vending machines and the average transaction is around $1.75. The typical vending machine generates over $75 of revenue each week and over $300 per month. Some vending machines generate much less than this, while some vending machines generate much, much more. The more well-placed, well-stocked machines an owner operates, the greater their profits and revenue.
It is also worth noting that vending machine tastes are shifting considerably. There was a time when nearly every vending machine in the country carried sodas, candy, chips and other fatty, sugary snacks. Today, consumers want much healthier options. They want water, juices, nuts, meal-replacement options and items they can feel good about sharing with their children.
There will always be a place for “junk food” machines in our country, but now is an excellent time to break into healthier product lines, especially because the profits on those lines can be much greater than other foods and beverages. Industry figures consistently show that the sale of healthy snack items outpaces junk food, and that the gap between the two widens every year.
Are Vending Machines a Good Investment?
Vending machines can be a great investment when you approach the business strategically. Like any other business, it pays to learn about the industry before jumping in and to have a mentor and someone supportive to help you learn the ropes so that you can turn a profit.
And, like any other business, it will take time to post a net profit. You will put money into the business up front, and it will take work to get to the break-even point and then operate in the black. Vending machines are not a good investment for people who aren’t willing to research the business, listen to experts who know what they are doing or who attempt to start a business without any support at all.
However, if you are willing to learn about the industry, listen to advice and put in the work necessary at the beginning to make the business work long-term, then vending machines can be a great investment. They can act as a source of second income, as a family business, a full-time business, or a source of passive income.
If you have the support of experts behind you, vending machines are great investments because they offer cash flow – customers put their money into the machine or swipe their card and you immediately collect the money. The business is flexible enough that you can start it in your spare time, as a nine-to-five, a retirement business or a business for stay-at-home parents. Finally, vending machines are good investments because the business is scalable. Once you start earning consistent profits, you can scale up at a comfortable pace.
Start Your Vending Machine Business Today
As you can see, vending machines can be profitable if you have the right support and strategies in place. If you are ready to start your vending machine business, partner with Naturals2Go, one of the best healthy vending machine companies serving the US.
Naturals2Go has helped thousands of entrepreneurs start successful businesses both in their spare time and as full-time opportunities. Our team supports you every step of the way and has been voted a Best Business Opportunity seven years running. The Naturals2Go system is designed to set you up for success and get your business running quickly with equipment, qualified leads, sales appointments, training, support, education and more – all without franchise restrictions or fees.
The key pillars of the Naturals2Go system include:
- Support staff that act as mentors
- Goals set by you, not a franchise administrator
- Help securing financing if needed
- Training and ongoing education
- No royalties or fees
- Total independent control of your business
If you’re ready to get started, we’re here to help you get the ball rolling. Contact Naturals2Go today to see how you could benefit from starting a profitable vending machine business.